Appetite for IPOs just hasn't roared back

TIM KILADZE

The Globe and Mail

Last updated Monday, Sep. 10 2012, 1:33 PM EDT

There was a time when IPOs generated easy fees for Bay Street because investors were dying to get their hands on any sort of new public stock. Today, bankers and lawyers have to work harder for their money, putting a lot more effort into getting these deals across the finish line.

The numbers show. In total, $1.2-billion was raised last quarter. Compare that with $2.4-billion in the same period in 2010, according to PricewaterhouseCoopers. Though, Athabasca Oil Sands Corp.'s mega deal in that quarter played a role in bringing the IPO market down, so take the number with a grain of salt.

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This isn't to say that some deals still can't get done. Gibson Energy just raised $568-million, and Parallel Energy Trust raised almost $400-million this spring. However, both deals were in the oil and gas space, and Gibson also had to cut its price range (taking a note from MEG Energy's playbook, which proved to be successful).

There is chatter on Bay Street that a roster of companies is now looking to go public over the next few months, but whether or not these IPOs see the light of day depends on investor demand. And there's good reason for investors to be cautious. Post-IPO performance
has been very uneven for companies that have gone public in 2011.

On the bright side, at least the number of IPOs this year, 34, is on par with the 32 in the first six months of 2010. So while the deals worth $100-million or more are spotty, smaller companies are still able to tap the public market.